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FCC seeks comments on reimbursable costs of TV stations changing channels as part of repacking of TV spectrum for incentive auctions, and announces panels to discuss the process

We have not written as much as we should have about the current FCC proceeding looking to reclaim parts of the television spectrum in order to repurpose it for auction to wireless users. The process by which the FCC will pay some broadcasters to give up their spectrum (the "incentive auction"), and get the money to pay for that surrender of spectrum from a simultaneous auction of the reclaimed spectrum, is a very complicated one. It will require careful judgments about how much money will be received and how much will be needed to be spent to clear the required spectrum, and to pay for other costs required by Congress in the enabling legislation (see our article here about the legislation), including the costs of moving remaining broadcasters to new channels after the auction. In order to provide a uniform block of wireless spectrum across the country (so that devices can be built to receive new signals on the same channels everywhere), the television stations that are not going to return their spectrum to the FCC will have to be “repacked” into a reduced television band, requiring some stations to change channels to accomplish that repacking. This week, the FCC made two announcements that will begin to shed some light on that transition – announcing the panelists for a discussion on the repacking process, and asking for comments on the costs to be incurred by TV broadcasters which can be reimbursed by the fund that the FCC is required to maintain to fund that repacking.

The FCC first released notice of the panelists for a September 30 discussion of how the repacking of TV spectrum will take place, discussing the likely mechanics of the repacking and the ways that the repacking can be accomplished efficiently. (For more on the discussion, go to this page on the FCC website). Representatives of the FCC will moderate panels of trade association representatives, engineers and others to discuss the repacking process. The discussion will be webcast by the FCC (go here for the webcast on September 30).

The Commission also released a Public Notice asking for comments on what expenses will likely be incurred by television stations forced to change channels as part of the repacking process. These expenses are to be reimbursed by the FCC, also from the proceeds of the auction. The Commission's Media Bureau invited comment on a preliminary Catalog of Eligible Expenses (developed by Widelity, Inc., a third-party contractor, and included as an attachment to the Public Notice). The preliminary Catalog contains categories and descriptions of expenses that the Bureau believes broadcasters and cable and satellite companies are most likely to incur as a result of broadcaster channel reassignments. The expenses seem to mostly concentrate on hard costs (e.g. transmitter, antenna, antenna line and transmitter building construction or modification), with some discussion of costs for tower crews and engineering expenses. Less thought seems to be given to softer costs – like engineering studies and publicity about the repacking (similar to that which was done in connection with the DTV transition, as over-the-air viewers will need to be informed of the need to rescan the television band to find the new frequencies of their favorite stations for those stations that are forced to change channels).

The Commission did encourage commenters to identify these additional expense categories that should be eligible for reimbursement. It also seeks comment on the prices associated with the hard and soft costs included in the Catalog of Eligible Expenses; the availability of discounts from list prices, including discounts for bulk orders; and whether to require entities seeking reimbursement from the Fund to obtain competitive bids for equipment and services that exceed a certain dollar threshold.

The Bureau also asked whether, to realize cost savings, the FCC should encourage broadcasters seeking reimbursement from the Fund to pursue tower and antenna sharing arrangements and, if so, how. To the extent that broadcasters may require interim equipment to continue broadcasting during the post-auction transition, the Bureau sought comment on ways in which broadcasters can incorporate the interim equipment into their permanent facilities, thus saving the expense of potentially purchasing the same equipment twice. The Bureau invited comment on any additional cost mitigation and transition coordination strategies that could reduce expenses and facilitate broadcasters’ moves to new channels.

Comments will be due on this notice by October 31, with Reply Comments due on November 14. Television broadcasters should carefully review these proposals to make sure that all anticipated reimbursement categories are included and, if not, that comments are filed pointing out any deficiencies.